Employee performance isn’t about growth, not “gotchas”

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We’re in a prolonged period of low unemployment, which means that losing an employee — to say nothing of losing a star employee — can’t really hurt your customers and the value you bring them. But, at the same time, high employee performance is the lifeblood of your company’s success. It’s no secret that motivated and high-performing employees can drive growth, improve customer satisfaction, and enhance overall productivity, but doing performance management right is absolutely critical. Most companies utilize the ubiquitous annual performance review. You replace “appraisal” with “evaluation,” “appraisal,” or any number of other words and still be talking about the same thing — we’re intentionally using “review” and we’ll get into why in a minute.

The big question: how do performance reviews add value for your customers?

When done right, annual reviews memorialize employee successes and misses, and provide a roadmap for employees to grow — this allows them to better serve your customers and reinforce your advantage over competitors. A couple of things that you need to consider when formulating your employee reviews:

1. Make sure you are focused on goal alignment. Your annual reviews allow you to align your employees’ goals with your company’s customer- and business objectives. This ensures that all your team members understand their role in achieving the company’s overarching mission.
2. Recognition and rewards. One of the biggest reasons employees leave is not feeling valued — performance reviews are a great time to recognize their hard work. As for the rewards part, most companies go the financial route (usually in the form of bonuses or profit-sharing), but don’t forget other options — after all, additional responsibility and professional development opportunities can reinforce your people’s assurance that they have a future with upward momentum.
3. It’s about growth, especially for those falling short. For underperformers, annual reviews help memorialize areas where progress has been made, but where improvement is still needed. Notice how we didn’t say “identify areas.” It is critically important that nothing in this conversation is a surprise (we’ll talk about that in a moment). The goal is to bring employees up to standard — and then help them grow beyond.
4. Communication and trust grows or withers during reviews. This is the time when you can solidify trust and transparency because you are showing your commitment to your team. Ultimately, you are trusting them to serve your customers and they will determine whether your customers come back.
5. That doesn’t mean everyone gets a gold star. Sometimes, it’s just not a good match and you have to separate employees who just aren’t meeting their goals. If you reach that point, you should have spent a lot of time working with them which, when combined with documentation (like performance reviews), will provide legal protection for you and your company if disputes arise. They demonstrate that employees were given fair opportunities for feedback and improvement.

While annual reviews hold tremendous potential, they are most effective when integrated into a broader framework of ongoing performance management. This is what we mean when we say that nothing should ever be a surprise in an employee’s annual review — it should be a recap of conversations throughout the year, improvements made, wins achieved, and gaps still being closed. If you have a “gotcha” moment, you are doing it wrong and your employees will never respond positively. In fact, they are much more likely to leave or, worse, start focusing more on protecting themselves from future gotchas than they do on taking care of your customers.

Ongoing performance discussions truly are a key to your success. But wait, there’s more…

1. Those ongoing conversations need to be timely. Waiting weeks, months, or, worse, an entire year to provide feedback makes the improvement harder to connect with and any praise less effective.
2. Employee engagement is the gift that keeps on giving. Regular communication shows employees that their contributions are valued. Engaged employees are more productive and invested in their work, leading to improved performance and morale in your company.
3. It’s about skillz. In all seriousness, frequent discussions about performance enable your employees to develop their skills throughout the year, rather than being surprised during an annual “evaluation” or “appraisal.” See now why we used “review” throughout this article? It helps foster a more supportive and collaborative work environment.
4. Course corrections before you (and they) sink. If an employee is veering off track, ongoing discussions provide opportunities for course corrections before issues become a problem. This proactive approach helps maintain performance standards before small issues become big ones.
5. It’s about building relationships. Regular check-ins build stronger relationships with your employees. This trust and rapport can make the annual review process less intimidating and more constructive.
6. Setting (and refining) expectations sets your team up for success. Ongoing discussions help reinforce expectations and goals, ensuring that employees understand what is required of them and how their work contributes to your company’s success. And those conversations can help refine those goals and expectations when necessary.

While we’ve all been on the receiving end of a performance conversation, we talk next week about how to create a system that helps you and your employees grow and, more importantly, deliver more value to your customers.